When are business owners personally liable for business debts?

Many times, a business will have substantial losses, from debts it is unable to pay off, from liability resulting from lawsuits or other acts done by the business, etc. Depending on how you have organized your business, you may find yourself personally liable for such business debts and losses. For example, if your business is setup as a sole proprietorship or a general partnership, you will be personally liable for all business debts. If you want to protect yourself from such general liability, however, you can organize your business as a corporation or LLC, which provide the business owners with limited liability.